LlamaRisk - Monthly Community Update

Governance
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LlamaRisk - Monthly Community Update

June 2026

Overview

LlamaRisk presents our June 2026 monthly update, summarizing key activities and outlining upcoming priorities.

Highlights

Recommendations and inputs

Asset onboarding

New chain

  • [ARFC] Deploy Aave Protocol v3.7 on Monad - Supported deployment with conservative initial parameters, provided risk assessments for the proposed listing assets, and recommended using SVR price feeds from launch due to Monad’s already established user base.
  • [ARFC] Deploy Aave V4 on Avalanche - Supported deployment with a single Core Hub and three spokes (Main, AVAX-Correlated, and Forex), recommending conservative initial Add Caps due to limited Avalanche liquidity shared with the same assets operating with significantly higher caps on Aave V3 Avalanche.
  • [ARFC] Deploy Aave V4 on Arc - Provisionally supported deployment ahead of Arc mainnet launch, with final support contingent on network and asset risk assessments. Proposed an initial architecture comprising a single Core Hub with Main and Forex spokes, with parameters subject to revision.

Misc.

  • [ARFC] Aave V4 Activation on Ethereum Mainnet - Proposed additional rounds of add and draw cap increases across the Core, Prime, and Plus hubs, raising the total supply cap ceiling to approximately $467M to accommodate growing demand as multiple reserves approached limits.

Research and analysis

  • [Direct-to-AIP] Aave V3 LTV and E-Mode Update - Proposed disabling collateral usage for non-blue-chip stablecoins, setting LTV to zero for illiquid collateral assets with high debt exposure, and restoring wstETH borrow caps on the Ethereum Core and Prime instances.
  • [ARFC] Risk Stewards Cooldown Reduction & Umbrella Pauser Role Reassignment - Proposed reducing the Risk Steward minDelay from 72 to 36 hours for six cap and IRM parameters to improve response speed under conservative cap settings, and reassigning the Umbrella pauser role to the Aave Protocol Guardian as the protocol’s standard emergency multisig.
  • [ARFC] Aave Risk Framework - Proposed a unified risk framework for Aave V3, V4, and Horizon, defining the standard for asset onboarding, quarterly reviews, material-change reassessments, and parameter or deprecation decisions. The framework is structured around four layers: Asset Risk, Bridging Risk, Monitoring & Automated Risk Oracle Systems, and Chain Risk.
  • [ARFC] Upgrade PT Risk Oracle to Protocol-Owned Infrastructure on CRE - Proposed upgrading the Pendle PT risk oracle to a protocol-owned, CRE-based automated pipeline where Aave Governance controls all contracts, risk managers only propose updates, and all parameter calculations and tuning decisions are transparently recorded onchain and use the existing linear discount-rate model.

Risk Stewards

The following proposals were published by us to update risk parameters via risk stewards:

Community Engagement

  • Aave Risk Dashboard - Launched our new Aave risk intelligence dashboard, featuring market and asset overviews, supplier and borrower distributions, Manual Risk Steward parameter updates, liquidation analytics, and SVR insights, with Aave V4 support coming soon.

Upcoming Focus Areas

Active and queued workstreams include:

Aave V4 growth and parameters

  • Further add and draw cap increases across the Core, Prime, and Plus hubs as demand grows.
  • Reinvestment controller parameter management and liquidation parameter tuning.

Risk tooling and monitoring

  • Adding Aave V4 monitoring to our risk dashboard.
  • Expand SVR analytics support to include future Monad chain expansion.

Real World Assets and Horizon

  • Continued due diligence and support across the Horizon RWA pipeline, including introduction of novel asset types and integration into Aave V4 architecture.

General Initiatives

  • Preparing a deprecation slate for assets no longer compliant under the newly proposed Aave Risk Framework.
  • Continued outreach to asset issuers for bridge compliance and working on bridge rate limit methodology.

Risk Stewards

  • Day-to-day parameter operations across Aave V3 and V4.

We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like the LlamaRisk team to focus more.

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